When I woke up this morning and checked my emails, my inbox was flooded with messages from insurance friends from all around the world commenting on ACE’s agreement to purchase Chubb. The overall opinion in my global insurance network seems to be that this will be a great acquisition with the potential to benefit both companies involved, their customers, and the insurance market at large.
As in any good marriage, ACE and Chubb seem to complement each other well; Chubb has been around for a long time and the company has a great brand and an excellent track record in servicing clients, especially around claims handling. It has a very strong position as a leading P&C carrier in the USA, and a solid global network. It doesn’t always seem to be very fast moving, but it has an excellent reputation around trustworthiness and reliability. Amongst its many businesses, Chubb is a global leader in servicing the high-net-worth-individuals market.
Now ACE is the much younger partner in this relationship, being born about one hundred years after Chubb. ACE has a reputation for being a very dynamic, agile insurer, and capitalizes quickly on market opportunities such as global expansion or new products. ACE has openly expressed a desire to significantly grow their share of the high-net-worth market. In addition, ACE is still building its global footprint and will benefit from Chubb’s operations in countries where ACE doesn’t have a presence yet.
The combined company will have around $40 billion in annual revenues, which elevates it to a key global player and should allow for some economies of scale with a positive impact on expenses over time and plenty of opportunity to leverage each partner’s competencies.
Now, after all these positive notes and obvious synergies, what could make this relationship stumble? It is not easy merging two companies with very different histories and cultures. To optimize the huge value this acquisition can potentially bring to all involved, these different business cultures will have to merge into one, keeping the best parts of each and giving up on the less optimal processes, behaviors, and actions. If the new Chubb is able to pull this off without overly distracting the organization from the business of insurance, this can truly be a match made in heaven, notwithstanding the age difference.
This blog entry has been republished with permission.
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